ABN AMRO, ING, and Rabobank have teamed up to publish guidelines for investing in the circular economy. The banks have designed the guidelines to help financial services companies around the globe transition towards a circular economy by increasing capital allocated to projects with circular business models (CBMs). These are business models that “strive for 1) employing fewer materials and resources for producing products and/or services; 2) extending the life of current products and/or services through refurbishment and remanufacturing; and 3) closing the loop of products’ life by recycling. In short, CBM seeks to reduce, retain, and recycle.” [1]

The banks are closely linked to the UK-based environmental charity Ellen MacArthur Foundation which was one of the first to “define and conceptualize the circular economy” and stresses the “crucial role” the financial industry plays in accelerating the transition to a circular economy.

The guidelines help financial services companies to identify whether initiatives are consistent with CBMs and encourage the financial industry to assess the environmental consequences of an investment, in particular, the pollution that results from the investment and the material, energy, and water used.

Annemein Kolk, head of commercial banking at ING Nederland, noted the dearth of generally accepted guidance in the industry and said the guidelines should “offer a starting point for what we can see as circular initiatives in our industry”.

Major mainstream businesses are increasingly expressing the idea of supporting the environment, or limiting environmental damage through business decisions.

Latham will continue to monitor the effect of these guidelines.

This post was prepared with the assistance of Olivia Featherstone in the London office of Latham & Watkins.

The purpose of this communication is to foster an
open dialogue and not to establish firm policies or
best practices. Needless to say, this is not a substitute
for legal advice or reading the rules and regulations
we have summarized. In any particular case, you should
consult with lawyers at the firm with the most experience
on the topic. Depending on your specific situation,
answers other than those outlined in this blog may be
appropriate. Your use of this blog site alone creates
no attorney client relationship between you and Latham & Watkins LLP.
Do not include confidential information in comments or other
feedback or messages left on the Environment, Land & Resources Blog, as these
are neither confidential nor secure methods of communicating
with attorneys.

Latham & Watkins operates worldwide as a limited liability partnership organized under the laws of the State of Delaware (USA) with affiliated limited liability partnerships conducting the practice in France, Italy, Singapore, and the United Kingdom and as an affiliated partnership conducting the practices in Hong Kong and Japan. Latham & Watkins operates in South Korea as a Foreign Legal Consultant Office. Latham & Watkins works in cooperation with the Law Office of Salman M. Al-Sudairi in the Kingdom of Saudi Arabia.